The literature from development economics asserted that two major spillover effects of the
prevalence of capital flight and low rate of investment in developing economies are the persistent increase
in unemployment and absolute poverty. Since an increase in the poverty rate can be viewed in terms of
forgone private and public investment in some poverty reducing programmes like education, health
intervention and job creation. Thus, this study investigates the interplay between capital flight and
poverty reduction in Nigeria using secondary data covering the period between 1981 and 2017. This study
employs the Augmented Dickey Fuller (ADF) test; Philip Perron (PP) test; Kwiatkowski, Phillips,
Schmidt and Shinβs (KPSS) all forms of unit root tests; Johansen test for co-integration and Dynamic
Ordinary Least Square (DOLS) for long run estimates. The study found that an increase in poverty level
in the country would be preceded by raising capital flight coupled with increasing dependence ratio and
decline in economic growth rate. In this scenario, the effect of a single digit economic growth is
dissipated once the circle continues unabated. Consequently, this study recommends that the Federal
Government of Nigeria through the relevant financial authorities should enforce regulation against illicit
flow of capital and prosecute offenders. The Federal Government must be seen to support the agency
efforts against illicit flow in the country
